Freeze on New Regulations in Florida Presents Opportunity for Health Care Businesses

For the next 90 days, Florida agencies, including the Agency for Health Care Administration (AHCA) and the Department of Health (DOH), have been ordered to freeze all rulemaking and may not amend any existing rules or propose or adopt any new rules. During that time, they must perform a comprehensive review of their existing rules and regulations and submit a report recommending which rules and regulations should be modified or eliminated. This is an opportunity for  Florida health care businesses to voice their concerns if they want changes to current or proposed rules.

Executive Order No. 11-01

On January 4, 2010, Governor Rick Scott signed his first executive order, immediately after being sworn in to office as Florida’s 45^th governor. Executive Order No. 11-01 directly impacts all Florida health care businesses by immediately suspending all rulemaking power for Florida agencies, including Florida’s two main health care agencies — AHCA and the DOH.

Executive Order No. 11-01 includes the following major provisions:

• No Florida agency under the direction of the governor may notice the development of proposed rules, amend any existing rules, or adopt any new rules, except at the direction of, and with the prior permission of, the Office of Fiscal Accountability and Regulatory Reform.
• By April 4, 2011, each agency must submit a comprehensive review of its existing rules and regulations, with recommendations as to whether any rules and regulations should be modified or eliminated. Each agency must identify and pursue the repeal or amendment of all rules and regulations identified as duplicative, unnecessarily burdensome, or no longer necessary. Each agency also must identify any legislative mandates that require the agency to promulgate or continue to impose rules that the agency believes negatively impact business and job creation or retention in the state.
• Executive Order No. 11-01 creates the Office of Fiscal Accountability and Regulatory Reform to review all rules (including those immediately suspended by the executive order) prior to promulgation. The Office of Fiscal Accountability and Regulatory Reform also will review all agency practices and contracts.
• Between January 4, 2011 and April 4, 2011, no agency may execute any contract with a value in excess of $1 million without obtaining prior approval from the Office of Fiscal Accountability and Regulatory Reform.

The comprehensive review of existing rules and regulations is designed to “reduce the regulatory burden on the citizens of Florida, to determine whether existing rules and regulations remain justified and necessary, and to determine whether such existing rules and regulations are duplicative or unnecessarily burdensome.”

One of the justifications stated for the changes in Executive Order No. 11-01 is that “the people of the State of Florida deserve a regulatory process that is efficient, effective, understandable, responsive, and open to the public.”

Florida health care businesses, particularly those participating in the Medicare and/or Medicaid Programs, are among the most highly regulated in the state, subject to considerable restrictions under federal and state laws, regulations and rules, in addition to sub-regulatory requirements from CMS, the U.S. Department of Health & Human Services, Office of Inspector General, the Florida DOH and AHCA.

House Bill 1565

Executive Order No. 11-01 builds upon the protections placed into law by House Bill (HB) 1565, which became effective after a veto override on November 16, 2010. The major provisions of HB 1565 include the following:

• An agency is required to prepare a statement of estimated regulatory costs prior to the adoption, amendment, or repeal of any rule that is likely to directly or indirectly increase regulatory costs in excess of $200,000 in the aggregate in the state within one year after implementation of the rule
• The statement of estimated regulatory costs must include, among other items, an analysis of whether the rule directly or indirectly is likely to have an adverse impact in excess of $1 million in the aggregate on economic growth, private-sector job creation or employment, business competitiveness, private-sector investment, productivity, innovation, or ability of persons doing business in Florida to compete with out-of-state businesses or domestic markets, or will directly or indirectly increase regulatory costs in excess of $1 million in the aggregate
• A proposed agency rule that exceeds these $1 million thresholds must be submitted to the president of the Senate and the speaker of the House of Representatives 30 days before the next regular legislative session and may not take effect until ratified by the Legislature

Recommendations and Strategic Implications

The agency rule ratification process required under House Bill 1565 and the comprehensive review required by Executive Order No. 11-01 present ample opportunities for Florida businesses, particularly those in the health care industry, to voice their concerns directly to AHCA or the DOH as well as the Legislature. Health care businesses have taken issue with a number of Florida health care regulations and rules on the grounds that such regulations are vague, inapplicable, unduly burdensome, or have a negative impact on health care business and job creation in the state.

Without doubt, 90 days to conduct a comprehensive review is a Herculean task for large agencies such as AHCA and the DOH. As important stakeholders in Florida’s health care industry, input from health care businesses would help AHCA and the DOH identify changes to improve and streamline existing Florida health care regulations. For businesses interested in this opportunity, skilled health care counsel and public policy professionals can help prepare comments and help ensure that concerns are articulated and fully considered by the agencies.

A copy of Executive Order No. 11-01 is available online at http://tinyurl.com/495wok2, while a copy of HB 115 is available at: http://tinyurl.com/4f6myuz.

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Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our health care clients and colleagues. If you have any questions about this alert or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals:

Nathaniel M. Lacktman
Tampa, Florida
813.225.4127
nlacktman@foley.com

Paul W. Lowell
Tallahassee, Florida
850.513.3380
plowell@foley.com

Jonathan P. Kilman
Orlando, Florida
407.244.3256
jkilman@foley.com

Gary D. Koch
Tampa, Florida
813.225.4124
gkoch@foley.com

George W. Ash
Detroit, Michigan
313.234.7147
gash@foley.com

Lawrence W. Vernaglia
Boston, Massachusetts
617.342.4079
lvernaglia@foley.com